November 30, 2024

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The Ministry of Economy and Finance at Government Complex Sejong (Yonhap)

SEJONG -- The scale of tax cuts for businesses will increase by more than 1 trillion won ($727 million) on-year in 2023, with its portion of total tax cuts for the overall sectors rising, state data showed Tuesday.

According to next year’s budget on tax expenditures, submitted by the Finance Ministry to the National Assembly, the collective tax cuts for the overall sectors are estimated at 69.3 trillion won.

Of them, corporate tax cuts -- including deductions for spending on fostering manpower specialized in researches and deductions for investments -- will reach 12.7 trillion won.

This is an increase compared to 11.3 trillion won in 2022 and 8.8 trillion won in 2021.

Further, the portion of corporate tax cuts out of the total cuts will climb to 18.4 percent in 2023, from 17.8 percent in 2022 and 15.6 percent in 2021.

This is in contrast to individual income tax cuts’ portion of total tax cuts, which has been on a downward trend. Tax cuts for individuals will fall to 58.3 percent of total tax cuts in 2023, compared to 58.6 percent in 2022 and 60.6 percent in 2021.

Though the scale of income tax cuts will also increase by 3 trillion won on-year to reach the 40 trillion won mark in 2023, the gap between corporate tax and income tax cuts’ portions of the total are narrowing.

Other cuts are for the value-added tax, which will account for 16.3 percent of total tax cuts for next year.

The portion of the value-added tax cuts is also on a downward trend, falling from 17.8 percent of the total in 2021 to 16.7 percent in 2022.

Earlier this year, the Finance Ministry said it would slash the corporate tax ceiling to 22 percent of companies’ earnings, from the current 25 percent.

The ministry also unveiled its plan to revise the taxation system to resolve double taxation on businesses at home and abroad. In addition, it plans to revise the inheritance and gift tax laws to help family-controlled corporations transition managerial power smoothly.

The policy is expected to promote business investment and job creation, according to the ministry.

By Kim Yon-se (kys@heraldcorp.com)